Foreign Investment

Unit 3 ATAR Economics, Taken from Kemp's Textbook

Investment Spending

purchase of capital equipment

foreign investment

flows of financial capital in/out of the Australian economy

financial assets

shares, bonds, properties, bank deposits

Foreign Investment in Australia

(FIA) money flowing in

Australian Investment Abroad

(AIA) money flowing in

International Investment Position

(IIP) difference between FIA and AIA (IIP = FIA - AIA)

foreign debt

relates to a country’s borrowing and lending of money

foreign equity

relates to a country’s buying of foreign assets and selling of domestic assets

residential investment

purchasing new houses/apartments

liabilities

equities in Australia purchased by overseas firms

equity

equities purchased by Australians overseas

foreign direct investment

a business, multinational corporation or individual invests in another country’s assets, establishes new business, participates in a joint venture or takes ownership stake

direct investment ownership stake

10% equity state/voting power

foreign portfolio investment

investment in a company’s shares, bonds or assets, but not to control/direct the firm’s operations/management

net foreign direct investment

mostly positive

foreign liabilities

sum/stock of foreign investment flowing into Australia

foreign assets

sum/stock of Australia’s investment overseas

foreign debt

amount of money owed to the rest of the world

foreign equity

extent to which overseas owns AU assets

net foreign liabilities

foreign liabilities - foreign equity

Government debt

Bad if used to pay for day-to-day, ok if used for investment in infrastructure